Efforts in strengthening clearing and settlement systems
A robust financial infrastructure is an indispensable element in capital market development, the Secretary for the Treasury, Mr K C Kwong, said today (Sunday).
A key component of that infrastructure is a sound and efficient clearing and settlement system which helps to minimise market risks, he said.
Mr Kwong was introducing the collaborative initiative on clearing and settlement infrastructure at the fifth plenary session on the final day of the Finance Ministers Meeting of the Asia Pacific Economic Co-operation (APEC) in Cebu, the Philippines.
"We have seen, in recent years, increasing emphasis being put on the development of better clearing and settlement systems as a means to promote capital market development. We have witnessed significant and fast changes in the region," Mr Kwong said.
He noted that a few member economies had already established advanced domestic systems while some others were planning to upgrade theirs, making it a very fertile ground for mutual technical assistance and a particularly worthwhile collaborative initiative to reinforce the spirit of co-operation within the APEC region.
Mr Kwong told other APEC delegates attending the meeting that Hong Kong would contribute to such efforts.
"In 1990, the Hong Kong Monetary Authority established a Central Moneymarkets Unit (CMU) which provides a computerised book-entry form of central and custodian service for domestic debts," he said.
"In December 1996, the CMU service achieved real time Delivery versus Payment (DvP) capability, thereby eliminating virtually the settlement risk.
"DvP was make possible with the successful launch of the Real Time Gross Settlement System in Hong Kong in which interbank payment is proceed continually and finality of settlement is instantaneous and irrevocable."
He added that Real Time Gross Settlement System also provided the building block for real time payment versus payment for foreign-exchange transactions.